Oregon will once again garnish wages, place liens on property and pursue other debt collection actions against people who received more unemployment benefits than they were entitled to prior to the pandemic.
Those collections were paused, the Oregon Employment Department said, in March 2020 as the pandemic hit. Now they will resume — and gradually expand to include overpayments of $25 or more incurred during the pandemic.
The Employment Department said federal law requires it to pursue collection of improperly paid benefits. The agency is responsible for safeguarding the trust fund from which laid-off workers get paid.
The change comes as the state’s unemployment benefits system returns to pre-pandemic norms. Among them: using far-reaching tools to recoup the overpayments that happen when people receive jobless benefits in error.
The Employment Department said that, in the near-term, about 5,500 people would again be subject to collections or to the legal action that precedes them. The agency said it robocalled those people last week to alert them that collection efforts would resume. Together, they owe the state about $19 million.
Not every type of overpayment is subject to debt collection, however — only those for which a claimant is considered “at fault.”
There are three basic kinds of overpayments:
1. Those caused by claimant fraud, including willful misrepresentation.
2. Those caused by people’s honest mistakes, for which they’re still considered at fault.
3. Those for which the claimant is not considered at fault. These include agency error, employer mistakes, and program changes over which the claimant has no control.
Only the first two kinds of overpayments are subject to debt collection. Overpayments that aren’t considered a person’s fault can only be recouped by withholding that person’s unemployment benefits until their debt is repaid.
The frequency of overpayments during the pandemic worried advocates for low-income workers, who feared they could be forced into collections for innocuous mistakes, including those resulting from language barriers.
Those concerns led to the passage of Senate Bill 172 earlier this year. The law created, for the first time, a waiver process for overpayments caused by people’s unintentional errors. Prior to that, waivers were only granted for the “agency error” category of overpayment.
The Employment Department is encouraging people facing financial hardship to apply for an overpayment waiver or deferment. There are no waivers for fraud.
The agency also said it prefers payment plans to collection tools such as liens, garnishments and the interception of tax refunds. It urged people with outstanding overpayments to set up a plan based on their ability to pay.
But those tougher tools are now reemerging.
The resumption of debt collection is just one sign that the Employment Department is exiting the emergency framework erected during the pandemic.
Oregonians receiving unemployment faced an Aug. 1 deadline to begin reporting their work search activities — or lose benefits. That bedrock requirement was suspended during the pandemic for the first time.
An even bigger end date looms on Sept. 4. That’s when all pandemic-related federal benefits programs are slated to expire.
Oregonians whose livelihoods were slammed in the pandemic continue to rely on these programs. Last week the Employment Department paid out $95 million in state and federal benefits to 121,000 people.
This story was updated with additional information from the Oregon Employment Department on the amount of debt subject to collections in the near future.